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Interactive Life Insurance: A privacy and social nightmare

January 28, 2019

By:

Sharifah Aine Datu Tambuyung

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Would you surrender your health information in exchange for Insurance incentives?

In September 2018, a US-based insurance company was in the spotlight across multiple media sites when it announced its shift from offering traditional life insurance policies to selling interactive policies that include optional fitness tracking via wearable devices. According to the company, the new program is a win-win initiative since policyholders are encouraged to adopt healthy habits while insurance companies are able to collect more premiums and spend less on claims payment because their clients actually live longer.

Under this new scheme, policyholders need to hit certain fitness goals or milestones which will be tracked and recorded through a wearable device. Once a policyholder hits such goals, he or she will be offered rewards such as premium discounts and gift cards for retail stores.

Now, a person providing certain health information to his or her life insurance company is nothing new. What is different under this new program is that policyholders are required to disclose a whole lot more health data, enough for the insurance company to track their every move. They may even be obliged to disclose sensitive information such as nutrition habits, gym usage, doctor’s appointments, and even medical exam results.

Naturally, this development has privacy advocates concerned. This early, they have already identified several privacy risks which have become the subject of discussions in forums around the world:

No one knows if insurance companies will use their clients’ health data to create a database for profiling purposes. With such wealth of information, it may be possible for them to identify those who have good health records and weed out those who have bad ones. They could then put those who fail to reach their standards on a blacklist very much like China’s social credit system.

The use of smart devices—which have a reputation for experiencing glitches—could lead to data inaccuracies. Such inaccuracies could then lead to misinformed and unfair decisions made by the insurance companies. Worse, it will be hard for a policyholder to contest a decision based on inaccurate data since it’s nearly impossible to track when, where, and how his or her device came up with the wrong data. Occasionally, there would also be those individuals who might actually find it difficult to use these smart devices. Their gadgets would be more prone to recording errors or device anomalies.

Putting all collected health data in a single database also makes them more vulnerable to malicious disclosures, alterations, deletions, and other security incidents. Although insurance companies are required by data protection regulations to implement measures that safeguard such data, there is no way of telling if those measures are ever adequate, since no system is immune from a breach or security incident.

Unauthorized disclosures of personal data will also be an issue. Companies could sell the personal data they’ve collected to advertisers, researchers, or other entities. If not them, their service providers who have a similar access could do so. The same can be said for unauthorized use. Insurance companies may also use the data to market their other products.

Fairness and equity in any system is important. In this case, the scheme does not seem to consider those without internet access, those who can’t afford to buy smart gadgets or healthy food, and those who don’t have the luxury to go on recreational fitness activities.

Today, these so-called interactive insurance programs are being offered only as an optional package for policyholders. Over time, though, there is a possibility that they will become the standard in the market. Should that happen, consumers will have no choice but to surrender their privacy, and obey whatever the insurance companies want them to do or agree to.

Here in the Philippines, this type of program is now being offered by a number of companies. Filipinos will need to confront this issue head-on if they are to have any hopes of preventing its development into a staple in the insurance industry. It is also imperative that the government regulates its use to ensure that the rights and freedoms of individuals are consistently upheld and respected by those in this business.

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